Dispute Settlement for Labour Provisions in EU Free Trade Agreements: Rethinking Current Approaches

Abstract

While labour provisions have been inserted in a number of EU free trade agreements (FTAs), extant clauses are widely perceived as ineffective. This article argues that there is a need to rethink the dispute settlement mechanisms related to labour provisions if their effectiveness is to be increased. It proceeds in three steps. First, we look at the current state of the art of labour provisions in EU FTAs in terms of legal design and practice and argue that the current arrangements are ill-equipped to foster compliance with labour standards. Second, we explore avenues to enhance the design of FTA labour provisions by reconsidering basic elements of the dispute settlement structure. Examining US FTA labour provisions, we highlight the importance of a formal complaint mechanism, on the one hand, and the availability of economic sanctions, on the other. Based on a review of existing practice, we contend, however, that these elements alone are not sufficient to effectively enforce FTA labour provisions. We argue that for FTA labour provisions to be effective, the current stateto-state model of dispute settlement needs to be complemented by a third-party-state dimension and that, additionally, there are good reasons to consider a third party-third party dispute settlement component. We ground these reflections in experiences with already existing instruments in other areas, namely investor-state dispute settlement and voluntary sustainability standards. Thirdly, we discuss options to better connect the dispute settlement mechanisms of FTA labour provisions to other international instruments for labour standards protection with a view to creating synergies and avoiding fragmentation between the different regimes. The focus here is on the International Labour Organization's supervisory mechanism and the framework of the OECD Guidelines for Multinational Enterprises.

Human Rights, Income and International Migration

“…Another approach is to use economic incentives as leverage to promote human rights (Hafner‐Burton, ; Marx et al., , ). The idea behind this is that countries and international organisations could tie material benefits to compliance by integrating human rights standards into an international agreement.…”

Labour Standards and Trade: In Search of Impact and Alternative Instruments

“…The case study by Oehri (2017) on the US FTAs complaint procedure is an example of the development of institutions. In this thematic issue, this is also addressed in the study by Marx, Ebert and Hachez (2017), which points to improvements in the dispute settlement mechanism in EU and US FTAs. The study by Kolben (2017), on the other hand, links a supply chain approach to FTAs, while Gansemans et al (2017) specifically analyse the supply chain of pineapples.…”

“…Two articles in this thematic issue come with innovative ideas to adjust the FTAs. Marx et al (2017) study the dispute settlement mechanism of EU and US FTAs and arrive at the conclusion that elements of other instruments could help to fill the gaps in the current complaint and dispute settlement provisions, also by allowing more third (nonstate) parties acknowledgement. Kolben (2017) shows how labour standards could be improved by combining a supply chain approach with FTAs, creating a more tailormade instrument.…”

Sanctioning Capacity in Trade and Sustainability Chapters in EU Trade Agreements: The EU–Korea Case

“…The dispute resolution mechanism is based on the promotional and monitoring methods that are prevalent in the ILO. Whilst this is more palatable from a political perspective, not least to EU partners, the literature examining TSD chapters and their implementation has suggested that without recourse to trade sanctions (withdrawal of preferences) these are unlikely to be effective (Lowe, 2019;Marx et al, 2017;Van Roozendaal, 2017). Turning to the EU-Korea TSD dispute in subsequent sections allows for an exploration of these claims.…”